IMMIGRANTS - NEW TO CANADA?
As a New Immigrant to Canada you have options available to you to finance the purchase of a home. Whether you are a professional, a tradesperson or self employed there are options for you. At Mortgage Planning Central we specialize in mortgage financing for those new to Canada. We make it a priority to understand all programs and products that relate to new immigrant financing. We also understand the stress involved in such a long distance move and that is why we recommend a mortgage consultation prior to moving to ensure that you understand the process and have your paperwork prepared so that your home purchase will be a smooth transaction.
If you have been in Canada for a while but have not purchased a home or need to refinance a home we can help with that as well.
We have associates that can speak the following languages:
Frequently Asked Questions:
Can I qualify for a mortgage in Canada as a new immigrant?
How much money do I need to put down as a deposit/down payment to qualify for a Canadian Mortgage?
- Yes, there are several options available to new immigrants
Do I have to build credit in Canada before I can qualify for a mortgage?
- You can put down as little as 5% of the purchase price depending on your situation. The smaller the down payment the more documentation the banks will require.
- No, but you must be able to provide credit references from your country of origin. Either bank reference letters or an international credit report. If you are putting down less than 10% as a down payment the banks will require a copy of your International Credit Report, which is available for UK clients at www.equifax.co.uk or www.experian.co.uk . OR, www.equifax.com and www.experian.com for US clients.
- If you are putting down more than 10% the banks will require two other forms of credit reference either from your UK bank or credit card company.
- Even though it is not required, it is still best to start establishing credit as soon as you land in Canada.
What if I can not obtain an International Credit Report or do not have Canadian Credit?
What is the best way to establish credit in Canada?
- The insurers will require that you put down at least 10% of the purchase price as a down payment and you will have to provide other forms of credit references. If you are brand new to Canada then bank reference letters from your country of origin will help. If you have been in Canada for at least 12 months you can show Canadian bank references, letters of reference from your landlord, utility company or cell phone provider.
How do the banks determine how much I can afford to borrow?
- The best way to start to develop credit is with a secure credit card. With this card you give the bank money and they will give you a credit card at that limit. If you make all payments as agreed the bank with return your money to you after 12 months. Some banks will ask for more money as a deposit and give you a lower credit limit. We can provide you with a credit card that will give you a credit limit equivalent to your deposit.
- When buying a car it is best to put down some money and try to finance a portion of the purchase. Please speak with your mortgage professional first to ensure that this will not affect the amount of mortgage you will qualify for.
- Most department stores will provide credit cards with small limits to new immigrants once you have a main credit card activated.
- For hints and tips on how to build your score faster contact us.
What is Mortgage Default Insurance?
- In Canada, the banks use two ratios to determine what you can afford. The first is called the Gross Debt Service Ratio (GDSR) and the second is called the Total Debt Service Ratio (TDSR). The GDSR includes your monthly mortgage payment, property taxes, heat and a portion of condo fees (if applicable). This ratio can not be more than 35% of your monthly income before taxes are deducted. The TDSR includes everything in the GDSR plus any other credit card, loan or lease payment you may have. This ratio can not exceed 42% of your monthly income before taxes are deducted.
What kind of interest rate should I expect?
- In Canada, if you put down less than 20% of the purchase price of your home the lenders will require that your mortgage is insured against default. There are three different insurers in Canada, CMHC, Genworth and AIG. This insurance protects the bank if you fail to make your payments. The insurance premium is pro-rated based on your down payment amount and is added to the top of your mortgage, it is not paid out of pocket. When a decision is being made whether or not to approve a mortgage it is often the insurer that makes the final decision.
What types of mortgage products are available to new immigrants?
- If you can prove that you had good credit in your country of origin or already have good established credit in Canada then you can qualify for our best rates. This rate would be the same rate that a Canadian citizen with good credit would receive.
What if I can't sell my home in my country of origin?
- Usually all terms and products are available with amortizations up to 35 years.
What expenses should I expect?
- If you still have a mortgage in your country of origin, the debt must be included in the mortgage application. If you are in this position please contact us to discuss your options.
* The above expenses will vary depending on the province and city that you will be relocating to.
- Lawyer Fees
- Appraisal (valuation) if required
- Home Inspection
- Title Insurance, if required
- Land Transfer Tax, depending on which province you will be living in
How much does it cost to use a mortgage broker?
What type of Documentation will the banks require?
- Most reputable brokers do not charge a fee to their clients, unless private funds are required (which is very rare). Brokers are paid a finder's fee from whichever lender you choose.
What if my new employer in Canada has placed me on probation for the first three months of my employment?
- Copies of your work permit/landed status papers, passports and social insurance number
- Employment letter from Canadian Employer
- Credit References
- Proof of where your down payment is coming from
- Sale of home - completion papers from solicitors
- Savings - 90 days worth of banks statements showing the money in the account
- Canadian Bank Account showing transfer of funds into Canada
What if I will not be employed when I arrive in Canada?
- In order to qualify for a mortgage your probation period must be over. Some employers will waive this period if they understand that you can not purchase a home while on probation.
- You can still qualify for a mortgage, you will just need a larger down payment of 35% of the purchase price. These lenders are not looking to prove income, but, will want to see a copy of your International Credit Report or other forms of bank references.
Canadian Mortgage Terms:
Length of time your mortgage payments will be based on can be up to 35 years
In the Uk, these are referred to as property valuations and are required on loans when you are putting down more than 20%
In the UK, this is referred to as council taxes. It is the fee that the city or town collects to pay for services like garbage collection
Since every situation is unique we suggest a consultation prior to your move so that your individual needs can be assessed. We will work with you from your first thought of moving to Canada right up to your possession date and beyond, many of our clients have been working with us for three years prior to moving to Canada.
We look forward to working with you through the entire process and welcome any questions that you may have.